QSE Managers Working Group Meeting Notes 9 April, 2010 Report to WMS 21 April, 2010 David Detelich - Chairperson

QMWG Topics  Offering Reliability Must Run (RMR) Units into the Nodal Market (Possible vote)  Wind-powered Generation Resource Production Potential (WGRPP) Forecast Accuracy  Load Forecast Accuracy  PRR848, Allow ERCOT Option to Cancel RPRS Capacity Commitments (Possible vote)

QMWG Topics cont.  NPRR216, Allow ERCOT Option to Cancel Commitments Previously Issued Through RUC (Possible vote)  NPRR210, Wind Forecasting Change to P50, Synchronization with PRR841 (Possible vote)  Nodal: Offering Duct Burner capacity (Update)  2011 Ancillary Service Methodology

Nodal Reliability Must-Run (RMR) Offers  ERCOT Action Item: Produce Whitepaper on subject – not completed  ERCOT is discussing internally the topic of how to offer the RMR units in DAM and RUC  Market Participants would like to be a part of that discussion  Recommend discussing at next QMWG meeting.

Market Impacts of RMR Offers  Offered in DAM; struck in DAM  Price convergence  How does a higher cost in offers affect that  Offered in DAM; struck in RUC  Not offered in DAM; struck in RUC  Higher prices for load at the congested node  May impact adjacent nodes as well

Nodal Settlement of RMR  Slide provided by ERCOT

WGRPP Forecast Accuracy  Discussion of Analysis Requirements  Discussion of Change to P50  April data should show adoption of change  Discussion of MET data  PRR811 implementation continues

Load Forecast Accuracy  Reviewed report from Potomac Economics available from their website.  Forecast error MW in 4 hour intervals  Visualize the bias over peak hours

PRR848, Allow ERCOT Option to Cancel RPRS Capacity Commitments  This PRR does not include compensation  Spent fuel  Opportunity costs  RPRS procurements are being reduced by the application of the new A/S procurement methodology  NSRS  Net Load error  QMWG recommends rejection

NPRR216, Allow ERCOT Option to Cancel Commitments Previously Issued Through RUC  QMWG supports concept with discussion request on the payments to the generators.  Allows ERCOT to run commitment studies the way a utility would where they can commit or decommit units.  Adds another incentive for resources to participate in the Day Ahead Market.  Would want to see evidence that the savings to the market outweigh the costs to the generators, uncompensated costs.

NPRR216 QMWG Recommendation  QMWG feels a holistic approach is needed to the problem of managing the reserves required on the system.  Currently the issue is being addressed in various stakeholder venues.  QMWG proposes to compare the current solution proposals for managing uncertainty.  delaying commitment, (NRG proposal)  AS methodology  Recommend that the NPRR be remanded to WMS.

NPRR210, Wind Forecasting Change to P50, Synchronization with PRR841  TAC voted to remand NPRR210 to PRS  Morgan Stanley comments raises the concern that Wind-powered Generation Resources (WGRs) may sell capacity not committed in Day-Ahead  could result in insufficient capacity when wind production is below the forecast  Could require ERCOT to commit additional units.  WMS Action (Vote)

Nodal: Offering Duct Burner capacity  Questions received from:  Brazos Electric Cooperative  EDF Trading  Duct burner capacity raises utilization and performance questions not addressed by the Nodal Market Design:  Could take more than 5 minutes to ramp in  Temperature sensitivity changes the point that duct burner capacity is added and ramp rate changes

2011 Ancillary Service Methodology  Market Participants request that ERCOT map out the process for updating the A/S methodology.  Issues that ERCOT should evaluate and address:  Quantity of A/S required at start of Nodal market  How to step to the steady state quantities after Nodal go live  Develop Net Load Risk values specific for each day  Improvements on the NSRS quantity determination.

Next meeting  Next Meeting: May 4, 2010  Topics  Wind generation forecast accuracy calculations  Load Forecasting Accuracy  Nodal Reliability Must-Run (RMR): ERCOT Created Three-Part Supply Offer  Nodal: Offering Duct Burner capacity  2011 Ancillary Service Methodology  GREDP and other metrics calculations